Call it the recession lesson. The downturn caused many newly thrifty consumers to detour into the world of cheap toilet paper, store brand shampoos, and other generic necessities. And you know what these consumers discovered? The cheaper stuff isn’t half-bad. Often, the cheaper stuff clearly gives more bang for the buck. So why would consumers ever go back to paying significantly more money for something that does basically the same job?
In fact, many consumers won’t revert to paying double for the cushier toilet paper, or four times as much for the ultra-fragrant shampoo. Not if they were satisfied with what they’ve been using during their recession-era foray slumming it with the generics. So the makers of big brand basics have a problem—because, by and large, consumers have been satisfied with less expensive household products. From the WSJ:
“In consumer staples, you saw consumers trade down” to cheaper products due to the recession, and they were “quite satisfied,” says Bill Pecoriello, chief executive of Consumer Edge Research LLC.
Convincing consumers that, in fact, they really do need to choose pricier basics again is obviously an uphill battle for the big-brand manufacturers. The key phrase is “quite satisfied.” The cat is out of the overpriced bag, even if that bag is emblazoned with brighter colors, bolder claims, and nicer typeface than its generic counterpart.
So what are the big manufacturers—we’re talking Procter & Gamble, Clorox, and such—going to do? Because they’re having trouble competing in straight-up face-offs with generic products, the manufacturers are rolling out new items—or rather, “new and improved” items. They’re also unleashing all the power of advertising at their disposal. More from the WSJ:
To lure them back to premium products—and prices—brand-name manufacturers are churning out “new and improved” goods ranging from more-absorbent diapers, to specialized toothpastes to closer-shaving razors. The strategy relies on advertising to get the word out.
That’s one reason the industry’s ad spending is expected to grow in 2010. So far such spending has been running well ahead of 2009 levels, with year-to-year increases for household products of 15% in January and 11% in February, says ad tracker Kantar Media, a unit of WPP. PLC…
P&G, the world’s biggest ad spender, plans a 20% increase in “consumer impressions,” or instances when consumers see its ads, during the fiscal year ending June 30. The Cincinnati-based maker of Pampers diapers, Crest toothpaste and Pantene shampoo says it will introduce 30% more “significant” innovations in products this year.
My personal consumer impression is that these ads and the “new and improved” claims are merely meant to distract us from the lessons we’ve learned during the recession—namely, that a cheaper price doesn’t necessarily equate to cheaper quality. Your basic pharmacy-brand razor will do a fine job shaving your face, even if it doesn’t have five blades and costs significantly less than $4 a blade. Generics can be just as good as the brand names, no matter if we’re dealing with prescription drugs or sugary cereals, ice cream or chocolate chip cookies. Cheaper prices are often better values, even when we’re talking about something that folks take extreme pleasure in (see: ice cream, cookies), but especially when we’re talking about standard household products that exist for sheer utility and don’t bring the consumer much, if any, joy.
Do the manufacturers of premium brands understand that consumers care about value? Or do they think we’re all gullible enough to buy everything that’s “new and improved” thrown our way?
Some experts say winning over consumers will require not just advertising, but a new approach: emphasizing value.
“For many years, any hint of price was a no-no. It was all about generating emotional connections,” Says Eli Portnoy, chief brand strategist at consulting firm Portnoy Group:”Now you’re going to have to work harder to convince me that I’m getting much more value by trading up.. You need to show me that I’m getting more for my money, and it’s not frivolous.”
Is that too much to ask for? Many consumers have learned a big, really simple lesson from the recession: Um, duh, when it comes to spending money, it’s nice to get good value.
Have manufacturers learned that we’ve learned this lesson?
Related:
Who Will Mop Up the Competition in the Battle for Household Good Dollars?